In most restaurants, waiters receive a large portion of their compensation through tips from customers. Generally, the size of the tip is decided by the customer. However, many restaurants require a 15 percent tip for parties of eight or more. Using the concepts from this chapter, discuss
(a) why the practice of tipping has emerged as a major method of compensating the wait staff,
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Write My Essay For Me(b) why the customer typically decides on the amount of the tip, and
(c) why restaurants require tips from large parties.
Smith Jr., Clifford W.; Jerold Zimmerman; James Brickley. Managerial Economics & Organizational Architecture (Irwin Economics) (Page 363). McGraw-Hill Higher Education. Kindle Edition.
SAMPLE SOLUTION
Tipping in Restaurants
Question 1
There are two reasons as to why the tipping practice in restaurants has emerged as a key compensation method for wait staff. First of all, it is one of the few compensation strategies that directly link performance to pay. This approach motivates the wait staff to deliver the best customer service possible so as to earn more in tips (Smith, Jerold & James, 2016). At the same time, waiters and waitresses are likely to….
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